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Smallholders and value chains: a winning formula

Press release - Wageningen, 19 February 2015

February 19, 2015

Value chains are crucial to transforming agriculture in developing states. As value chains become more inclusive, small-scale farmers can gain access to previously inaccessible markets, receive important information to improve cultivation techniques or benefit from new sources of financing. The Technical Centre for Agricultural and Rural Cooperation (CTA) and the Food and Agriculture Organization of the United Nations (FAO) teamed up to investigate 18 value chains in 11 African, Caribbean and Pacific countries. The aim was to identify and describe practices and structures best suited to ensure commercial and environmental sustainability and the inclusion of smallholder farmers.

Opportunities for sustainable, green and inclusive agricultural value chains in ACP countries, jointly published by CTA and FAO, summarises the findings of the case studies and draws lessons for the successful development of sustainable value chains and pitfalls to be avoided.

The value chains featured in the book were all set up through private sector initiatives. They revolve around the output of a single crop or livestock product in a single country and, in most cases, involve exporting at least part of the output.

Some case studies examine recent developments in long-established value chains, such as cocoa in Cameroon, pineapples in Ghana, sugar in Uganda, tea in Kenya, citrus in Belize and mangoes in Haiti. Others focus on enterprises that were established relatively recently to compete with imports or with existing enterprises. These include eggs in Jamaica, milk in Kenya and cocoa in Grenada. In the Pacific, new value chains are described for taro and papaya, which were set up to take advantage of unexpected markets.

Contract farming arrangements with smallholders is a formula that receives detailed scrutiny, including the case of rubber producers in Liberia, maize farmers in Ghana and hot pepper growers in Jamaica. Also examined is how linking producers to services such as quarantine treatment can help them to export products and how partnerships, for example with NGOs, can help isolated producers to overcome production and processing hurdles and tap new markets.

The studies reveal that the integration of farmers into value chains can have mutually beneficial outcomes for the farmers themselves and for other value chain participants, making a strong case for linkages between input suppliers, producers and players involved in processing and marketing.

It also emerges that environmentally friendly approaches, such as non-polluting measures to increase yields, are most successful when driven by market forces. Backed by certification, green measures can raise the sales prices of a raw product and products derived from it.

There is encouraging news for small-island Caribbean and Pacific countries, despite the special challenges they face of high production costs due to lack of economies of scale. Several success stories show that it is possible for these small states to export agricultural commodities and to fully benefit from market globalisation.

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.